UPDATE 2-Brazil prosecutors charge Lula's former chief of staff

Reuters Staff

3 Min Read

(Adds potential sentence, details)

SAO PAULO, Sept 4 (Reuters) - A top aide to Brazil’s former president, Luiz Inacio Lula da Silva, was charged with corruption, money laundering and racketeering on Friday, making him one of the most senior members of Brazil’s ruling Workers’ Party to be formally accused in a massive kickback scandal.

Jose Dirceu, who was Lula’s chief of staff between 2003 and 2005, was arrested on Aug. 3 and prosecutors say he was a key architect of a price-fixing and political kickback scheme at state-run oil firm Petroleo Brasileiro SA.

“Dirceu committed crimes and should be punished because we are all equal in the eyes of the law,” federal prosecutor Deltan Dallagnol said at a news conference, reiterating his goal of stamping out what he calls a culture of impunity in Brazil.

Dallagnol and other prosecutors in the southern city of Curitiba charged 17 people, including former Petrobras executives Renato Duque and Pedro Barusco and former treasurer of the Workers’ Party João Vaccari, who is currently in jail and standing trial for related charges.

Prosecutors said the Workers’ Party of Lula and his successor President Dilma Rousseff received bribe money in the form of electoral donations, allegations the party denies.

Dirceu was already under house arrest in Brasilia for running a vote-buying scheme and will stand trial in the much larger scandal focused on Petrobras and other state-run companies if a federal judge accepts the charges.

His lawyer did not immediately respond to request for comment.

Charges against Dirceu could bring the scandal closer to Lula, who is not being investigated.

Lula is the target of a separate influence peddling probe into whether he improperly used his connections after leaving office to benefit engineering conglomerate Odebrecht SA abroad. He says he acted within the law.

Dirceu, Lula’s senior political adviser, was responsible for the decision to appoint two ex-Petrobras executives involved in the scandal, former refining and supply chief Paulo Roberto Costa and former head of engineering and services Duque.

Prosecutors have accused former Petrobras executives and two dozen engineering firms of inflating the value of service contracts and funneling the excess funds into their own bank accounts and to politicians, a graft scheme they believe moved more than $2 billion over a decade.

They said Dirceu received 11.8 million reais in bribes originating from Petrobras and hope he would be sentenced to more than 30 years in jail, Brazil’s maximum sentence. ($1 = 3.85 Braziian reais) (Reporting by Caroline Stauffer; Editing by Marguerita Choy)